Europe PP sellers manage to keep margin in December

LONDON (ICIS)–Polypropylene (PP) producers in Europe are managing to keep hold of some spread at freely negotiated accounts.

– PP prices down

– 2019 supply to be tight 

The December propylene contract fell by €100/tonne, and PP prices are falling by €50-80/tonne, buyers and sellers said.

The PP market is balanced, with no shortages in spite of several production problems.

INEOS’ Grangemouth plant in the UK is under force majeure restrictions, and this week sources said Braskem had declared force majeure from its Wesseling plant in Germany due to lack of propylene from a cracker at the same site.

Some other production was restricted because of propylene issues, caused by low water levels on the River Rhine.

The PP market is generally balanced and a planned cracker turnaround schedule in 2019 is expected to maintain a level of tightness in the PP sector, but the current series of production issues has not had much impact on the market.

One buyer was not convinced there would be any supply issues next year.

“Everybody keeps talking about it [planned crackers outages] – but they are planned!” it said.

Sources put this down to buyers not wanting to leave the year with a high level of stocks.

Others described a more fundamental demand problem, with one distributor saying it was it “biggest concern” after seeing very low volumes in December.

Prices are not yet fully settled for December, and some buyers are bidding low – at minus €80-90/tonne – but sellers are in no mood, and feel no necessity, to go so low.

Of course, propylene-linked contracts will have had an automatic drop of €100/tonne for December pricing.

Sellers in general are relaxed for 2019, and buyers are caught between fearing an interruption of supply, and feeling they are being hoodwinked by suppliers who are hinting at shortages like those in 2015.

Sellers are not concerned, saying it will cost a good deal to cover potential monomer shortages next year, and buyers will discover that PP may well be in tight supply.

Sellers, in any case, do not plan to sell their material cheaply.

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PP is used in packaging, the manufacture of household goods, and also in the automotive industry.

Picture source: Isopix/REX/Shutterstock

Focus article by Linda Naylor